Incentives to innovate in “product ecosystems” – June 2021

June 16, 2021

Article link

Restrictive practices by digital ecosystems have become an area of significant concern for competition enforcement theory and practice. Two such practices have received particular attention: restrictions to openness and restrictions to interoperability. This independent article by London Economics Partner, Dr Paula Ramada, explores the role of these restrictions in “product ecosystems”, i.e. ecosystems monetised on the basis of a core product or service. In this class of ecosystems, these two practices have parallels with vertical restraints and with tying practices, respectively. By exploring these parallels, this article finds both anti-competitive risk and the potential for positive effects on efficiency and on incentives to innovate.